2. Restrone Inc. sells computer mainboard. At year-end, due to a sudden increase in manufacturing costs, the replacement cost per set of mainboard is $73. The history cost is $56, and the current selling price is $68. The normal profit margin is 15% of the selling price, and the selling costs are $4 per set. According to U.S. GAAP, which of the following amounts should each set of mainboard on Restrone's year-end balance sheet?
8. A firm uses LIFO for inventory accounting and reports the following: ●COGSLIFO $342000 ●beginning inventor $75000 ●ending inventory $78000 Footnotes to the financial statements reveal a beginning LIFO reserve of $35000 and an ending LIFO reserve of $39000. COGS on a LIFO basis is:
10. A company uses the LIFO inventory method, but most of the other companies in the same industry use FIFO. Which of the following best describes one of the adjustments that would be made to the company's financial statements to compare it with other companies in the industry? The amount reported for the company's ending inventory should be:
A.increased by the ending balance in its LIFO reserve.
B.decreased by the ending balance in its LIFO reserve.
C.increased by the change in its LIFO reserve for that period.
13. Firm A expenses costs while Firm B capitalizes them. All the other things being equal, which of the following best describes the debt ratios of Firm A and Firm B?
15. In the early years of an asset's life, compared to a firm using straight-line depreciation, a firm using the double-declining balance depreciation method will report:
16. A company acquires some new depreciable assets. Which of the following combinations of estimated salvage value and useful life will mostly likely produce the highest net profit margin?
A.low salvage value estimates and long average lives.
B.high salvage value estimates and long average lives.
C.high salvage value estimates and short average lives.
22. A firm recently recognized a $4300 loss on the sale of machinery. The original cost of the machinery was $28000 and the accumulated depreciation at the date of sale was $15000. What amount did the firm receive from the sale?
24. Assume U.S. GAAP applies unless otherwise noted. A company has equipment with an original cost of $850000, accumulated amortization of $300000 and 5 years of estimated remaining useful life. Due to a change in market conditions the company now estimates that the equipment will only generate cash flows of $80000 per year over its remaining useful life. The company's incremental borrowing rate is 8 percent. Which of the following statements concerning impairment and future return on assets (ROA) is most accurate?
A.The asset is impaired and future ROA increases.
B.The asset is impaired and future ROA decreases.
C.The asset is not impaired and future ROA increases.
33. In the first year of operation, a firm produces taxable income of - $30000. The prevailing tax rate is 30%. The firm's balance sheet will report a deferred tax:
34. An analyst gathered the following information about a company: ●Taxable income is $63000. ●Pretax income is $72000. ●Current tax rate is 40%. ●Tax rate when the reversal occurs will be 30%. What is the company's deferred tax liability at the end of year 1?
35. An analyst is comparing a firm to its competitors. The firm has a deferred tax liability" that results from accelerated depreciation for tax purposes. The firm is expected to continue to grow in the foreseeable future. How should the liability be treated for analysis purpose?
A.It should be treated as equity at its full value.
B.It should be treated as liability at its full value.
C.The present value should be treated as liability with the remainder being treated as equity.
36. Which one of the following statement is most accurate? Under the liability method of accounting for deferred taxes, a decrease in the tax rate at the beginning of the period will:
38. The developer of a new software received $30000 advance from the software firm. $8000 of income taxes were paid on the advance when received. The software will not be finished until next year. Determine the tax basis of the advance at the end of this year.
39. The following information relates to a profitable company that offers a warranty on a new product introduced in 2009:
accrued warranty expenses for the warranty in 2009
$300000
actual expenditures for repairs under the warranty in 2009
$200000
If the company's tax rate is 35 percent, which of the following most accurately describes the deferred tax recorded in 2009 with respect to the new product warranty?
40. A company reports net income of $80000 for the year. The table below indicates selected items which were included in net income and their associated tax status.
including in determi- ning net income
tax status
depreciation expense dividend income fine related to environmental damage R&D expenditures
$70000 $120000 $100000 $50000
$90000 allowed for tax purposes dividends not taxable not deductible for tax purposes $20000 allowed for tax purposes
The company's tax rate is 35%. The company's current income taxes payable is closest to:
41. While reviewing a company, an analyst identifies a permanent difference between taxable income and pretax income. Which of the following statements most accurately identifies the appropriate financial adjustment?
A.The effective tax rate for calculating tax expenses should be adjusted.
B.The amount of the tax implications of the difference should be added to the deferred tax liabilities.
C.The present value of the amount of the tax implications of the difference should be added to the deferred tax liabilities.
42. A firm reported the following: ●Gross DTA at the beginning of the year $23000 ●Gross DTA at the end of the year $24500 ●Valuation allowance at the beginning of the year $4600 ●Valuation allowance at the end of the year $6700 Which of the following statements best describes the expected earnings of the firm? Earnings are expected to:
A.Earnings are expected to increase.
B.Earnings are expected to decrease.
C.Earnings are expected to remain relatively stable.
43. At the beginning of the year, a company issues a $1000 face value, semiannual coupon, bond with an 8 percent coupon rate maturing in 10 years. The annual market rate of interest at issuance was 12 percent. The initial liability recorded for this bond is closest to:
52. A company has convertible bonds with conversion price of $30 per share. The stock price is currently $35 per share. For analytical purposes, the bonds should be treated as:
A.debt.
B.equity.
C.a combination of debt and equity.
A B C
B
[解析] 由于股票的市场价格明显高于其转换价格,从而基于财务分析的目的,应当将上述债券视为权益。
53. Dacon Inc. has a capital structure consisting of $40 million of liabilities and $50 million of equity. Dacon issues $3 million of preferred shares and $5 million of bonds with warrants attached (debt component comprises 70% of the value) for total cash proceeds of $8 million. Which of the following amounts is the revised debt-total capital ratio upon the issuance of the two new financial instruments?
54. A finance lease results in the following net income effects to a lessee as compared to an operating lease: early years later years ① lower lower ② lower higher ③ higher lower
56. Which of the following statements is least likely an off-balance-sheet financing method?
A.Sale of receivables.
B.Convertible bonds.
C.Throughput arrangements.
A B C
B
[解析] 可转换债券应作为负债记录在资产负债表中,因而不属于表外融资的方法。
57. At the beginning of the year, a lessee company enters into a new lease agreement that is correctly classified as a finance lease, with the following terms:
annual lease payment due 31 December
$100000
lease term
5 years
appropriate discount rate
12%
depreciation method
straight-line basis
estimated salvage value
$0
With respect to effect of the lease on the company's financial statements in the first year of the lease, which of the following is most accurate?
A.The reduction in the company's pretax income is $72096.
B.The reduction in the company's cash flow from financing is $56743.
C.The reduction in the company's cash flow from operations is $72096.
59. Which of the following statements about direct financing leases and operating leases is least accurate for a lessor?
A.Total cash flows are not affected by the accounting treatment of lease.
B.As compared to an operating lease, a direct financing lease will result in higher operating cash flows.
C.An operating lease will result in lower earnings in the earlier years of the lease, while the direct lease will result in lower earnings in the later years.
60. For a company that has sold receivable but retained the credit risk, which of the following statements is least likely to require adjustment by an analyst?
61. At the beginning of the year, two companies issued debt with the same market rate, maturity date, and total face value. One company issued coupon-bearing bonds at par and the other company issued zero-coupon bonds. All other factors being equal for that year, compared with the company that issued par bonds, the company that issued zero-coupon debt will most likely report:
A.higher cash flow from operations but not higher interest expense.
B.both higher cash flow operations and higher interest expense.
C.neither higher cash flow from operations nor higher interest expense.
62. On 1 January 2010 a company enters into a lease agreement to lease a piece of machinery as the lessor with the following terms:
annual lease payment due 31 December lease term estimated useful life of the machine estimated salvage value of the machine carrying value (cost) of leased asset implied interest rate on lease
$75000 6 years 7 years $0 $300000 7%
The firm is reasonably assured of the collection of the lease payments.
The total effect on 2010 pre-tax income for the lessor from this lease is closest to: